Assignment

Kelly Griffin, an audit manager, had begun preliminary analytical procedures of selected statistics related to the Majestic Hotel. Her objective was to obtain an understanding of the hotel's business in order to draft a preliminary audit plan. She wanted to see whether she could detect any troublesome areas or questionable accounts that could require special audit attention. Unfortunately, Griffin caught the flu and was hospitalized. From her sickbed, she sent you the schedule she had prepared (Exhibit 4.57.1) and has asked you to write a memorandum identifying areas of potential misstatements or other matters that the preliminary audit plan should cover.

MAJESTIC HOTEL
Preliminary Analytical Procedures
FYE 3/ 31/ 14

The Majestic Hotel, East Apple, New Jersey, compiles operating statistics on a calendar- year basis. Hotel statistics, below, were provided by the controller, A. J. Marcello, for 2014. The parallel column contains industry average statistics obtained from the National Hotel Industry Guide.

Required:

Write a memorandum describing Majestic's operating characteristics compared to the industry average insofar as you can tell from the statistics. Do these analytical procedures identify any areas that could represent potential misstatements in theaudit?